Experts discuss Shapella’s impact on the Ethereum mainnet and price

The planned April 13 hard fork Shanghai-Capella (Shapella) will, in the long run, lead to a positive dynamic in Ethereum’s price by reducing investors’ risk, according to experts surveyed by ForkLog.

The upgrade is the next stage of Ethereum’s development roadmap after The Merge, and includes changes to the consensus and execution layers. Its main aim is to open access to ETH withdrawals from staking.

Validators will gain access to full or partial thawing of stake-nodes. According to Andrey Sobol from Matter Labs and ZkSync, a vast amount of capital is currently locked in illiquid Ethereum staking, so Shapella “will open the gates of liquidity”.

Representatives of DeFi platform Lido also call this part of the hard fork “the most substantial and positive.”

“Before Shapella, the amount of Ethereum in staking could only grow — now it can be “taken back”. On one hand, this opens the possibility of reallocating assets between existing and new staking products. On the other hand, a significant uncertainty is removed, as staking becomes “fully functional”. This suggests that the number of services and their users will grow,” they said.

In addition, Shapella will help optimise the operation of smart contracts and fees within the network, particularly for coinbase addresses, and will reduce the cost of creating new blocks.

“The hard fork will bring small improvements at the level of EVM, adding the long-awaited PUSH0 instruction and reducing the cost of accessing the miner wallet address. It also prepares the network for the deprecation of the smart contract deletion mechanism, since users often continue sending transactions to addresses that are no longer active, losing both gas and money,” noted Anton Bukov, co-founder of 1inch Network.

Co-founder of Allbridge.io Andrey Velikiy believes that the upgrade will reduce risks for participants in various liquid staking protocols.

“Linking derivatives of liquid staking such as stETH could deviate during periods of excessive market volatility. The possibility of withdrawals will help reduce such risks for the alignment of the derivatives’ prices,” he explained.

Experts anticipate higher demand for liquid staking products after unlocked ETH hits the market.

“Such services will be reformatted. They will still be needed, as they enable you to place staked ETH into another protocol,” adds Andrey Sobol.

In his view, Shapella, like any hard fork, could potentially pose security risks to the Ethereum network, especially given the scale of changes when “huge sums of money move from illiquid to liquid.”

On the impact of the upgrade on the price of the second-largest cryptocurrency by market capitalization, Sobol gave a mixed answer:

“On the one hand, the ability to thaw ETH and sell it could increase supply. On the other hand, a fully functioning PoS could energize enthusiasm for the system as a whole and spur media attention and increase demand.”

CEO of Credentia, Stepan Gershuni, noted that validators could not interact with staked Ethereum for the last two years and for many this is a chance to sell it.

“However, the developers have anticipated a dynamic system that will not allow all funds to be withdrawn at once. Therefore, even if this affects the cryptocurrency’s price, it will be very small,” he said.

Andrey Velikiy agrees:

“In the short term there will be some downward pressure on Ethereum’s price because some validators will prefer to withdraw their money from staking. But since withdrawal limits will be introduced at the protocol level, price pressure will be limited. In the long run, reduced risks for investors and participants in liquid staking services will likely lead to a positive dynamic for Ethereum’s price.”

Lido’s developers, who are currently working on a new version of the protocol, told ForkLog that they will not have time to present it before Shapella’s activation.

Two major changes will be included in the upgrade:

• the ability to swap stETH back to ETH;
• a modular architecture around a “set of validators”.

Lido emphasized that the contributors team is focused on ensuring the protocol’s security. The code is currently undergoing evaluation by four firms — Certora, Statemind, HEXENS and Oxorio; earlier, various parts of the upgrade passed audits by Sigma Prime, ChainSecurity and MixBytes Camp.

“Node operators are testing their infrastructure, which should enable the timely and safe withdrawal of ETH from staking. Both processes are progressing fairly well, but they require time: the Lido upgrade for liquid staking is not expected before May,” the project team said.

One of the constraints of the proposed Lido V2 design is that it “should not rely on assumptions about future events or market conditions.” Therefore, Lido’s developers declined to forecast how much assets users will withdraw from staking in the first weeks after the hard fork. The main task, they say, was “to build a protocol that will operate consistently under any conditions.”

After the Shapella hard fork, withdrawals of rewards earned by validators will be available exclusively to addresses with the 0x01 prefix, as only they can specify the path for crediting the cryptocurrency.

“For the liquid staking protocol Lido, the initial amount of these rewards should be around about 200,000 ETH, which the protocol’s code will prioritise for processing withdrawal requests. Without withdrawal requests in the queue, these funds will be sent to staking,” the Lido team said.

CEO of RockX, Zhulin Chen, considers Shapella an important step toward greater scalability and network efficiency for Ethereum. Despite likely short-term market volatility, the ecosystem will gain substantial long-term benefits from faster transaction processing, lower transaction costs, and improved smart-contract security.

“With the Shapella upgrade, the landscape of liquid staking will change forever, and Ethereum will become the benchmark for returns in crypto. We will see numerous innovative solutions for direct and liquid staking, which will begin to play a much larger role in the crypto space,” Chen noted.

Read more about the Shapella upgrade in ForkLog’s special feature.